Servaas Storm's research while affiliated with Delft University of Technology and other places
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Publications (71)
Comparative empirical evidence for 22 OECD countries shows that country differences in cumulative mortality impacts of SARS-CoV-2 are caused by weaknesses in public health competences, pre-existing variances in structural socio-economic and public health vulnerabilities, and the presence of fiscal constraints. Remarkably, the (fiscally non-constrai...
The Rebuilding Macroeconomic Theory Project, led by David Vines and Samuel Wills (2020), is an important, albeit long overdue, initiative to rethink a failing mainstream macroeconomics. Professors Vines and Wills, who must be congratulated for stepping up to the challenge of trying to make mainstream macroeconomics relevant again, call for a new mu...
Based on comparative empirical evidence for 22 major OECD countries, I argue that country differences in cumulative mortality impacts of SARS-CoV-2 are largely caused by: (1) weaknesses in public health competence by country; (2) pre-existing country-wise variations in structural socio-economic and public health vulnerabilities; and (3) the presenc...
The Rebuilding Macroeconomic Theory Project, led by David Vines and Samuel Wills (2020), is an important, albeit long overdue, initiative to rethink a failing mainstream macroeconomics. Professors Vines and Wills, who must be congratulated for stepping up to the challenge of trying to make mainstream macroeconomics relevant again, call for a new mu...
Questions about the decline of Social democracy continue to excite wide interest, even in the era of Covid-19. This paper takes a fresh look at topic. It argues that social democratic politics faces a fundamental dilemma: short-term practical relevance requires it to accept, at least partly, the very socio-economic conditions which it purports to c...
De-carbonization to restrict future global warming to 1.5 °C is technically feasible but may impose a “limit” or “planetary boundary” to economic growth, depending on whether or not human society can decouple growth from emissions. In this paper, we assess the viability of decoupling. First, we develop a prognosis of climate-constrained global grow...
The European Union’s Green Deal, a €1 trillion, 10-year investment plan to reduce greenhouse gas emissions by 55% in 2030 (relative to 1990 levels), has been hailed as the first comprehensive plan to achieve climate neutrality at a continental scale. The Deal also constitutes the Union’s new signature mission, providing it with a new raison d’etre...
The concern that an economy could experience persistent stagnation, caused by a structural weakness of aggregate demand, goes back to Alvin Hansen’s (1939) thesis of ‘secular stagnation’. Hansen’s thesis has been revived in recent times, when it became clear that productivity and potential growth in the OECD countries have been declining for decade...
Using macroeconomic data for 1960–2018, this article analyzes the origins of the crisis of the “post-Maastricht Treaty order of Italian capitalism.” After 1992, Italy did more than most other Eurozone members to satisfy EMU conditions in terms of self-imposed fiscal consolidation, structural reform, and real wage restraint—and the country was unden...
This study analyses domestic market integration’s (DMI’s) dynamic influence on regional economic growth in China. The authors construct a matrix of annual DMI indices for 29 provinces for 1997–2015. They calculate the reciprocal matrix and combine it with the β-convergence model and spatial econometrics to analyse the relationships between DMI and...
Milton Friedman's presidential address to the American Economic Association holds a mythical status as the harbinger of the supply-side counter-revolution in macroeconomics – centred on the rejection of the long-run Phillips-curve inflation–unemployment trade-off. Friedman (seconded by Edmund Phelps) argued that the long run is determined by ‘struc...
The shift in financial intermediation from banks to financial markets, and the introduction of financial market logic into areas and domains where it was previously absent, have not just led to negative developmental impacts, but also changed the ‘rules of the game’ and facilitated rent-seeking practices of a self-serving global elite. Establishmen...
This is a rejoinder to the challenging comments by Professors James K. Galbraith and William Lazonick on my article “The New Normal: Demand, Secular Stagnation, and the Vanishing Middle Class.” Professor Galbraith favors an evolutionary approach to the issue instead of my approach but admittedly not on very convincing grounds. His characterization...
The U.S. economy is widely diagnosed with two “diseases”: a secular stagnation of potential U.S. growth and rising income and job polarization. The two diseases have a common root in the demand shortfall, originating from the “unbalanced” growth between technologically “dynamic” and “stagnant” sectors. To understand how the short-run demand shortfa...
Mainstream climate economics takes global warming seriously, but perplexingly concludes that the optimal economic policy is to almost do nothing about it. This conclusion can be traced to just a few "normative" assumptions, over which there exists fundamental disagreement amongst economists. This paper explores two axes of this disagreement. The fi...
The ‘political economy of industrialization’ in mixed economies has been a key concern of Development and Change right from the start, as will be clear from this collection of 22 articles, published in the journal between 1970 and 2015. All papers analyse what government should and should not do — and, more importantly, what government can do to fo...
Higher real wages provide macroeconomic benefits in terms of increased demand if the economy is wage-led (as in most European economies) and of higher labour productivity growth and more rapid technological progress. Taking these benefits into account, we show that a wage-led economy becomes less strongly wage-led. The impact of higher real wage gr...
Proponents of the Comprehensive Economic and Trade Agreement (CETA) emphasize its prospective economic benefits, with economic growth increasing due to rising trade volumes and investment. Widely cited official projections suggest modest GDP gains after about a decade, varying from between 0.003% and 0.08% in the European Union and between 0.03% an...
The Eurozone crisis has been wrongly interpreted as either a crisis of fiscal profligacy or of deteriorating unit-labor cost competitiveness (caused by rigid labor markets), or a combination of both. Based on these diagnoses, crisis countries have been treated with the bitter medicines of fiscal austerity, wage reductions, and labor market deregula...
The Eurozone sovereign debt crisis, triggered by the 2008–09 US financial crash, brought to light major macroeconomic imbalances in member countries that had been accumulating following the introduction of the common currency in 1999, but were masked by relatively good growth performance thereafter. The main symptoms of these intra-Eurozone imbalan...
Development economics appears to have come full circle, as interest in and concern for industrialization have made a comeback, echoing major concerns of the early development economists. However, when it comes to the practice of industrialization strategy and industrial policy, the default recommendation is still the market and static comparative a...
Intra-Eurozone current-account imbalances (and divergent external debt positions) cannot be attributed to the deterioration of cost (or price) competitiveness in Europe’s periphery vis-à-vis its core. Imbalances were driven by high domestic demand growth in the periphery, which was financed by capital flows from the core. The external finance – fol...
Owing to its strong dependence on exports, Germany was among the economies hit hardest by the financial crisis. But unlike almost all other countries, Germany emerged from the crisis quickly and stronger than before. What lies behind this success story, if at all it is one? The commonplace—neoliberal—answer is that Germany's success is the hard-won...
The dominant view, both on the mainstream right and on the left, holds that the Eurozone crisis is a crisis of labour-cost
competitiveness—with trade imbalances (and hence foreign indebtedness) being driven by divergences in relative unit labour
costs (RULCs) between surplus and deficit countries. To re-balance Eurozone growth, the mainstream solut...
Owing to its strong dependence on exports, Germany was among the economies hit hardest by the financial crisis. But unlike almost all other countries, Germany emerged from the crisis quickly and stronger than before. What lies behind this success story, if at all it is one? The commonplace – neoliberal – answer is that Germany's success is the hard...
According to standard writing class instructions, a surefire way of having one’s manuscripts ignored is to start off with a lengthy prologue. We deliberately offend this golden rule and take a detour, treating our readers to a perhaps unusual account of a well-known piece of recent economic history — the ‘Dutch employment miracle’ of the 1980s and...
This study aims to explore the impact of transport capital stock on economic growth in Chinese regions. Using panel data for a sample of 28 provinces and municipalities over the period 1978–2008, the empirical findings show that there is significant spatial variation in the productivity effects of transport infrastructure in China. The highest outp...
China's transport infrastructure distribution and its economic activities have largely the same pattern of spatial clusters. This paper aims to determine whether causal linkages exist between transport infrastructure investment and economic growth in China at national and regional levels. We examine causality in a panel cointegration and a Granger...
Can climate change be stopped while fossil fuel capitalism remains the dominant system? What has to be done and what has to change to avoid the worst-case consequences of global warming? These questions are debated in the six contributions which follow. This introduction to the debate sets the stage and puts the often widely diverging views in cont...
We present empirical evidence for a cross section of twenty OECD countries (1984–2004) that a relatively regulated and coordinated (“rigid”) industrial relations system promotes long-run labor productivity growth. This conclusion is reinforced when we differentiate between (three) categories of OECD industrial relations systems and test for differe...
The widespread belief in the natural rate of unemployment among economists has been extraordinary. Debate is more over why it fluctuates than whether policy should use it as a target. But these Dutch economists argue that allegiance to the NAIRU could well reduce potential productivity growth and therefore make inflation more likely than is necessa...
We argue that the conventional NAIRU (non-accelerating inflation rate of unemployment) model is a special case of a larger model of equilibrium unemployment, in which demand, investment, and endogenous technological progress do have lasting effects on steady-inflation unemployment. It follows that the labor market policy prescriptions (i.e. to dras...
According to the mainstream theory of equilibrium unemployment, persistent unemployment is caused mainly by ‘excessive’ labour market regulation, whereas aggregate demand, capital accumulation and technological progress have no lasting effect on unemployment. We show that the mainstream non‐accelerating inflation rate of unemployment (NAIRU) model...
According to the mainstream theory of equilibrium unemployment, persistent unemployment is caused (mainly) by "excessive" labor market regulation, whereas aggregate demand, capital accumulation, and technological progress have no lasting effect on unemployment. We argue that the mainstream nonaccelerating inflation rate of unemployment (NAIRU) mode...
Real wage growth restraint is generally regarded as a necessary condition for sustained gross domestic product growth and lower unemployment in the Organization for Economic Cooperation and Development (OECD). We use a general Keynesian growth model, allowing demand growth to be wage led or profit led, to argue that the case for real wage restraint...
The impact of labour market regulation on labour productivity growth is ambiguous: on the one hand, regulation raises labour adjustment costs, which negatively affects productivity; but on the other hand, regulation may (for various reasons) raise worker motivation and commitment and (by means of wage bargaining co-ordination) stimulate labour-savi...
East Asia's newly industrializing economies are the paragon of successful industrialization. This article investigates what lies behind this success by identifying seven ‘stylized facts’, which concern the contributions to industrialization and growth of structural change and technological change; and the role played by investment, savings and expo...
1 (Department of Economics, Faculty TBM, Delft University of Technology, The Netherlands
What will be the domestic growth and distributional effects of agricultural trade liberalization in India? How fast should Indian agriculture be liberalized and what policies should characterize the transition? This paper uses Indian agriculture to analyze medium-term transition problems that arise in many major economic reforms. Employing a dynami...
This paper investigates the process of agricultural globalisation in developing countries subsequent to the structural adjustment and stabilisation programs as well as the Uruguay Round Agreement on Agriculture. The first part discerns patterns in trade flows, price movements and changes in the growth of value added, productivity and labour absorpt...
This paper aims to provide a descriptive and analytical account of the extent to which agriculture in the developing economies has become integrated with external markets. For most developing economies (DEs), the 1980s were a time of crisis when liberal reforms, including domestic and external liberalization of agriculture, were also initiated. Thi...
How open should a developing country's agriculture be to the world economy? What are the medium-term effects for growth and income distribution of "close" integration with world agricultural markets through trade liberalisation and domestic reform? And what are the implications of the "strategic" integration of agriculture with world markets? Using...
Within the present multilateral trading system, the developing countries are obliged to gradually open up their agricultural sector to world markets. As a result of this, the effectiveness of conventional instruments of food price stabilisation will be greatly reduced. How then is food price stability to be maintained in a liberalised open economy?...
Citations
... In the US, the COVID-19 pandemic emerged during the Trump administration, a time period characterized by policies which posed a threat to public health through the politicization and repudiation of science, inciting racialized and nativist violence (e.g., surveillance, policing), undermining health insurance coverage, weakening social support systems, and shifting public spending away from public health to other purposes such as military spending and tax windfalls for corporations and the wealthy [17]. These have directly and indirectly contributed to the pandemic's impact among specific populations and areas in the US [18,19]. ...
... Following the GFC of 2007-08, the mainstream New Keynesian economics was the object of much criticism for not foreseeing the crisis. Notwithstanding the attacks, New Keynesian economics proved somewhat resilient and continued to be the mainstream theoretical perspective in macroeconomics in the post-GFC world (see, for instance, Storm, 2021). Prominent frontline policymakers and prestigious mainstream economists belong to the New Keynesian school, such as Ben Bernanke, Janet Yellen, Lawrence Summers, Olivier Blanchard, among others. ...
... The pandemic has uncovered the pandora's box of contradictions characterising our socio-economic structure such as the essential and invisible role of women in carrying out care activities necessary for social reproduction (ILO 2018), the weakening of the public health sector due to austerity measures (Bramucci et al. 2020;Storm 2021), the rise of precarious and poorly paid jobs and the absence of SINAPPSI | Connessioni tra ricerca e politiche pubbliche | Anno XI n. 2/2021 | Rivista quadrimestrale dell'INAPP universal income support systems (Spasova et al. 2021). As this dramatic situation persists, the risk of a sharp increase in inequalities and a general deterioration in the living conditions of a large part of the population becomes more than concrete. ...
... Mainstream macroeconomists have blinders on when it comes to dealing with economic inequality. To most, inequality is an issue outside the scope of macroeconomics, because in their favoured DSGE models, neither monetary nor fiscal policy can, by assumption, do much about it, nor does inequality matter in determining long-run (potential) growth (Storm 2021). In addition, most macroeconomists tend to believe that attempts to reduce inequality (by redistributive policies) come at the cost of lower long-run growth. ...
... Mallick and Sousa (2017) found that technology has a positive and significant relationship with workers' wage rate in the United States. Storm and Naastepad (2012) specified the coefficient of productivity growth takes a positive value, which is statistically significant from zero. Marquetti (2004) identified a one-to-one cointegrating relationship between the growth rates of real wages and labour productivity in the long run, finding that the income distribution shares are constant. ...
... These studies focus on the decoupling between CO 2 emissions and economic growth and found weak or negative decoupling relationships in different sectors. [7][8][9][10][11][12][13] Similarly, the studies focus on decoupling between CO 2 emissions, energy consumption intensity and economic 1 growth and found strong or absolute relative decoupling relationships. [14][15][16][17][18][19] Few studies looked at the decoupling relationship between carbon emissions, structure, population size, per capita output, energy intensity and economic growth. ...
... 484 the definition of "reaching climate neutrality at the continental scale" was used for this agreement [Desouza, 2020;Storm, 2020]. ...
... ,Storm (2019) andKiefer et al. (2020) stand on a quite different point of view. The overall belief is that the redistribution of income at the expense of the labour share shrank investment opportunities through the old-fashioned accelerator mechanism. ...
Reference: Essays on Secular Stagnation in the USA
... The excessive weight of exports on total demand (Celi et al., 2018) and the dependence on imports of technologies and intermediate goods (Crespi and Guarascio, 2019) are linked to a 'political stalemate' on crucial decisions -from energy and defense to EU macroeconomic governance and economic policy (i.e., industrial policy). The latter resulted in a 'deflationary environment' (Storm, 2019), which has constrained domestic demand (and, in particular, investment), jeopardizing the EU's productive and technological capabilities, and worsened the core-periphery divergence (Gräbner et al., 2020). ...
... Local governments will break down barriers to market entry under integrated development, which can facilitate the development of the industrial division of the labor system within an urban agglomeration [41]. It will bring about regional industrial agglomeration [21,42]. In addition, based on the theory of circular cumulative causality, the industrial linkages, spatial overflow and input sharing generated by the integrated development can effectively accelerate the process of inter-city knowledge transfer and innovation diffusion, which enhances the efficiency of economic growth [19]. ...
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